In a significant move to fortify Ukraine's private sector, the International Finance Corporation (IFC), the private investment arm of the World Bank, has successfully mobilized nearly $1 billion. This funding aims to contribute to the reconstruction of Ukraine's economic landscape, with a particular emphasis on the private sector. Makhtar Diop, the Managing Director of the IFC, informed Reuters that out of this mobilized sum, approximately $620 million is sourced from the investment arm's own balance sheet, with an additional $360 million coming from external financing.
The initiative is part of a larger $2 billion package announced in December 2022, reflecting the international community's commitment to supporting Ukraine's recovery. Despite the progress, challenges lie ahead, as Diop highlighted the need to monitor the evolving political situation and secure additional resources to safeguard investments, given the IFC's higher exposure to Ukraine compared to other development agencies.
With Kyiv urgently seeking reconstruction funds, estimated at $400 billion, the IFC plays a crucial role in providing guarantees to instill confidence in external investors. Diop emphasized that the main challenge is offering guarantees to boost investor confidence, ensuring the successful deployment of resources for the support package.
The IFC has already made strides by funding guarantees worth $304 million in the agricultural sector, supporting critical grain imports and exports. Collaborating with the World Bank's Multilateral Investment Guarantee Agency and Norwegian energy provider Scatec, the IFC has also facilitated investments in pre-assembled solar panels and battery storage.
Looking ahead, the IFC is exploring potential investments in offshore wind capacity and distribution generation, although plans remain in the preliminary stages. Moreover, Diop indicated that the IFC is keeping a close eye on conflicts in other regions, particularly in assessing how to contribute to the rebuilding of Palestinian territories after de-escalation of violence.
Discussing the broader investment focus of the IFC, Diop outlined plans to increase equity investments, with a specific focus on African equity markets. While not providing specific details, he indicated a shift towards more equity investments, particularly in the productive sector. In its 2023 annual report, the IFC's portfolio exposure consisted of 71% loans, 21% equity, and the remaining portion in guarantees and other financial products. This strategic move underscores the IFC's commitment to diversifying its investment approach and supporting sustainable economic development globally.